The Brent Pension Fund Sub-Committee met on 24 June 2025 to discuss investment monitoring, the outcome of a government consultation on local government pension schemes, engagement activity undertaken by the Local Authority Pension Fund Forum, member training, and the 2025 triennial valuation. The sub-committee agreed the key assumptions for the 2025 valuation.

Here's a breakdown of the key topics discussed:

2025 Triennial Valuation

The sub-committee reviewed and agreed the key assumptions for the 2025 triennial valuation of the Brent Pension Fund. A formal valuation of the fund is required every three years to assess its financial position. The valuation:

• Compares the fund's actual performance against assumptions made at the last valuation.
• Values the assets and liabilities of each employer and the pension fund as a whole.
• Sets employer contribution rates for the next three years.
• Reviews the Funding Strategy Statement (FSS).
• Performs a health check on the fund's solvency.

Key assumptions that were agreed on include:

• Discount rate: The rate used to value liabilities to be paid out in the future.
• Future investment returns: The interest rate the fund expects to achieve in the future.
• Inflation: Future price inflation, measured by the Consumer Prices Index (CPI).
• Salary expectations: Projected salary increases.
• Longevity: How long pensions will be paid for, based on life expectancy.
• Demographic factors: Other demographic factors, such as early retirement rates.

The fund's actuary, Hymans Robertson, developed the assumptions in consultation with fund officers, taking into account current market conditions and long-term expectations. The actuary also benchmarked the assumptions against industry standards and Local Government Pension Scheme (LGPS)-wide trends.

The sub-committee agreed to increase the level of prudence in the discount rate assumption, reflecting increased market and economic uncertainty.

Q1 2025 Investment Monitoring Report

The sub-committee reviewed the Q1 2025 Investment Monitoring Report, which outlined the performance of the Brent Pension Fund over the first quarter of 2025-26. Key points from the report included:

• The fund posted a negative return over the quarter, ending the period with a valuation of £1,310.1 million, down from £1,335.8 million at the end of Q4 2024.
• The fund's passive global equity mandates were the main contributors to negative absolute returns over the quarter.
• UK government bonds also detracted, as rising gilt yields led to a fall in their value.
• On a relative basis, the fund underperformed its benchmark by 0.1%.
• The cash held by the fund decreased slightly over the period to £63.6 million.

The report also included a post-Q1 market update from Hymans Robertson, which noted that equity markets sold off sharply following tariff announcements by the US President, but have since regained their lost ground.

LGPS 'Fit for the Future' Consultation Outcome

The sub-committee received an update on the outcome of the government's Fit for the Future consultation, which proposed reforms to asset pooling, local investment, and governance of LGPS funds. The government has confirmed that it will move ahead with the core proposals, with minimal amendments.

Key takeaways from the consultation outcome, as summarised in a briefing note from Hymans Robertson, included:

• Funds will continue to set their own investment strategies, but will be required to delegate the implementation of their investment strategy to their pool, as well as taking their principal investment strategy advice from the pool.
• All assets, listed and unlisted, must also be transferred to the management of a fund's pool.
• The government has reiterated its encouragement for the LGPS to increase its investment exposure in the UK, with particular focus on exploring local investment opportunities.
• The main governance proposals brought forward are based on recommendations following the Good Governance project, undertaken by the Scheme Advisory Board (SAB).

LAPFF Engagement Report

The sub-committee received an update on engagement activity undertaken by the Local Authority Pension Fund Forum (LAPFF) on behalf of the fund. The LAPFF Engagement Report March 2025 provided an overview of the work undertaken by LAPFF during the relevant period, including:

• Water stewardship: LAPFF is engaging with investee companies, including those in the mining sector, to address critical water-related risks.
• Banking & Financing Fossil Fuels: LAPFF continues to engage with the banking sector, recognising its pivotal role in financing the transition to a decarbonised economy.
• Governance: LAPFF revisited governance concerns in a follow up meeting with Vistry Group, following a September 2024 discussion on decarbonisation.
• Nature: Since Nature Action 100 (NA100) published its benchmark in October 2024, LAPFF has worked within investor groups to refine the asks of companies.

Training Update - Members' Learning and Development

The sub-committee received an update on the provision of the LGPS online learning facility and informed committee members of recent training developments. The report included an update on member progress against the current training plan, and reminded the sub-committee of the importance of ensuring consistent engagement and progress in completion of the required modules.